New L.A. Water Rate Structure Endorsed : Environment: The DWP board backs the system in which big and wasteful users would pay larger fees than other residential or business customers.

The Los Angeles Department of Water and Power Commissioners on Tuesday unanimously endorsed a top-to-bottom restructuring of water rates under which 71% of residential customers and 65% of business users would see reductions in their bills.

Under the new rate policy, which still requires approval of the City Council and Mayor Tom Bradley, big and wasteful residential and business users would pay higher rates than small or efficient users.

Officials said the plan is “revenue-neutral,” raising the same amount of money as the current system. If adopted, the new rate structure would become effective Jan. 1.

The action follows the recommendations of the mayor’s Blue Ribbon Committee on Water Rates, which in July called for a massive overhaul and simplification of the agency’s cumbersome rate structure.

The plan would establish a two-tier rate system for residential users under which any household using more than 175% of median usage would pay a substantially higher rate for the excess amount. The typical residential customer--who uses 24 billing units, or 18,000 gallons every two months--would see his bill drop by about $5.75, to $41.04, according to the DWP.

Businesses would be subject to a similar two-tier system, in which they would pay a higher amount for exceeding 125% of their own average use based on consumption during winter months. Officials estimated that 65% of commercial and industrial users would enjoy lower rates under the new system, while most of the remainder would see increases of less than 10%.

Bradley immediately endorsed the commissioners’ action through a spokeswoman. “The mayor is pleased that the commission supported the committee’s effort to develop a water-rate structure that is cost-effective, environmentally effective and fair to all customers,” said Valle Bunting, a press deputy to the mayor.

City Councilman Mark Ridley-Thomas, who chairs the council’s ad hoc committee on rate restructuring, said the essential question facing council members is whether the plan “is a more fair structure. . . . I’m of the view that it moves us in that direction.” But he quickly added, “There’s a lot to be sorted out.” Ridley-Thomas has scheduled a hearing on the matter for Tuesday.

The mayor formed the committee in June, 1991, when the city was in the midst of a prolonged drought and was forced to impose a mandatory conservation program. The City Council later demanded that a complete review of rates be conducted and a proposal on restructuring be developed as part of its approval of a 3.6% water rate hike that went into effect in January.

Mike Gage, a television news commentator and president of the DWP Board of Commissioners, said the proposal “makes enormously good sense.” Several environmental organizations, including the Mono Lake Committee, endorsed the plan.

But not all factions of the diverse customer base are happy with the proposed changes.

In a final public hearing before the plan was approved by commissioners on Tuesday, a parade of homeowners urged the panel to amend the plan so that it would not as dramatically affect large suburban and canyon-area residents who use above-average amounts of water for landscaping.

Marsha Brooks, representing the Woodland Hills Homeowners Assn, said the plan “is not quite fair” to San Fernando Valley residents who have larger lots and landscaping needs.

Alan Kishbaugh, president of the Federation of Hillside and Canyon Assns., said that climatic differences between coastal and valley sections of the city make the use of a citywide median standard unfair. He recommended that the commissioners establish standards for various parts of the city.

The business community also has some doubts about the proposal.

George Wein, an architect who represented the Valley Industry and Commerce Assn. on the blue-ribbon committee, said in an interview, “I think it’s a good package, but any good package still has problem areas.” Wein said he hopes the City Council will address the problems of businesses with large seasonal swings in water use, which would be inordinately affected by the proposed plan.

Ray Remy, president of the Los Angeles Chamber of Commerce, said his organization is taking a neutral stand on the proposal. “If it wasn’t for the difficult economic climate, we’d be more supportive than we are,” said Remy. While acknowledging that most businesses will benefit from the program, Remy said that the effect on a few larger employers is still a concern.

During the hearing, Commissioner Rick Caruso asked what reaction the largest water users, such as Anheuser Busch Inc., have had to the rate proposal.

Norm Buehring, assistant chief engineer for water, said he met with executives of the firm and that “they haven’t complained.” Officials at Anheuser Busch, which operates a brewery in Van Nuys and is the largest private user of water in the city, could not be reached for comment by The Times.

Gage, after listening to the various criticisms, said the rate plan could be revisited in a year and revised, if necessary. “All of us recognize that this is a dramatic change,” Gage said. “We can’t anticipate everything that will happen.”

The proposal also seeks to address the sticky problem of pricing water in a drought. In the current drought, the DWP has been forced to raise its rates to cover fixed expenses, even as it ordered customers to cut back on usage.

Under the proposal, the two pricing tiers would be shifted downward in a drought. Instead of allowing residents 21 billing units in the lower, cheaper tier, the amount would be ratcheted down to between 19 billing units and 16 billing units. A billing unit is 748 gallons.

Water consumption above that amount would be priced at the higher, second-tier level. This, officials said, would raise additional funds while giving users an incentive to conserve.

Water Plan The DWP Board of Commissioners on Tuesday endorsed a plan under which heavy water users will pay higher rates, while light to average users will reap a savings . Median Use Household uses 24 billing units* every two months Current: $46.79

Proposed: $41.04

Heavier Than Average Use Household uses 48 billing units* every two months

Current: $88.14

Proposed: $89.34

Heavy Use Household uses 72 billing units* every two months

Current: $129.50

Proposed: $159.42

* One billing unit equals 748 gallons. Median means half the customers use more than that amount; half use less.